BayBrazil’s tech hub includes a growing number of successful entrepreneurs who are actively involved in the process of helping Brazil innovate. Among them is Fred Aslan, former Vice President at Venrock, who received his M.D. from Yale and M.B.A. from Harvard. After years advising healthcare companies, he started his own. In our conversation, he talks about the differences in the health care sector of U.S. & Brazil, his company’s latest acquisitions and his transition from investor to entrepreneur.
BayBrazil: Why did you start Adavium Medical?
Fred: Few people realize the Brazilian private healthcare market is the third largest in the world, but with regulatory complexities, substantive red tape, and a high degree of fragmentation. Adavium Medical was formed with the intent to bring sophistication and scale to the medical device and diagnostics market in Brazil by building and commercializing the most compelling portfolio of products. Our portfolio today is made up of products that we commercialize on behalf of leading international companies, as well as high-quality, yet more cost-effective, products that we develop on our own.
BayBrazil: Having now worked in the Health Sector of both the US and Brazil, what are the major differences?
Fred: At a very high level, the Healthcare Sector in Brazil has two very distinct needs. The first set of needs comes from the segment we call “Premium” which consists of the leading clinics, laboratories and hospitals that primarily cater to the private sector. This segment looks a lot like US clinics, laboratories and hospitals that need the latest, and most innovative technologies to provide the highest quality care and are generally less price sensitive. The second set of needs comes from a segment that is not really found in the US, that we call the “Long-tail”, who are the substantively more numerous clinics, laboratories and hospitals that need high quality products but at an affordable price. It is this segment that largely cares for the overwhelming majority of the Brazilian population who have more modest purchasing power and limited healthcare coverage. This latter segment is often unmet in Brazil as well as in most emerging markets because most of the R&D in the world is invested in innovative products that are out of reach of the “Long-tail”.
BayBrazil: Tell us about the latest acquisitions and what it represents for the company and its clients?
Fred: Our ambition was to create the largest Brazilian Medical Device and Diagnostics company with sufficient commercial scale to offer a complete portfolio of products to address the needs of both the “High-end” as well as the “Long-tail”. We spent the first couple of years focused on bringing a number of innovative products from US companies into Brazil and we wanted to expand our portfolio and commercial capabilities at a more rapid pace. We spent the past several years evaluating and acquiring the best Brazilian companies, with the best portfolio of products in our segments, that together with our team and capabilities, would create a commercial and manufacturing leader. With these two latest acquisitions, we now have the largest number of customers, are well positioned to be the partner of choice for international companies, have our own proprietary brands, and manufacturing capabilities so we can continue developing our own products for Brazil as well as for exportation.
BayBrazil: Brazil in in the midst of a severe crisis. Do you expect that it’ll impact your business in the near future?
Fred: Brazil’s crisis impacts every industry. Political uncertainty and a shrinking economy makes it more challenging for people to be optimistic about the future and to make investments. The last few years have been particularly challenging to healthcare product companies given the overwhelming majority of products sold in Brazil are imported and the US dollar has more than doubled in value. However, health is a basic and constant need, and as a result the healthcare market has been largely sheltered from the recession. We see this in every country. As the population grows and ages, the healthcare market follows. I have strong conviction that the Brazilian healthcare industry will grow dramatically in the next decades given our demographics. Most people don’t realize this, but the percentage of the population in Brazil who is 65 or over is growing three times as fast as in the US. The Brazilian health industry will be challenged to keep up with the growing demand.
BayBrazil: How did you make the transition from being an investor to an entrepreneur?
Fred: As an investor I had the privilege to work closely with amazing entrepreneurs who defied the odds and dedicated years to fulfill their vision. An investor has the opportunity to provide a lot of support; from the actual capital and helping with hiring and strategy, to opening doors and being a trusted partner who the entrepreneur can count on during difficult times. That is an important but different role than that of the entrepreneur who is on the front-lines, facing daily challenges, passionately obsessed with turning a concept into reality – a role I always admired but never experienced. The concept for Adavium was percolating in my mind for a long time given my Brazilian roots and my healthcare experience, and when it finally took hold, I just had to make it a reality. I was convinced I could find other people and investors who would also share my passion for the concept and I was fortunate to find early support from Venrock and other very talented Brazilian executives who together with my later investors, partners and employees helped me build Adavium into what it is today. I personally think that many times people don’t choose to be entrepreneurs – the passion and obsession to make something happen takes control and there is no turning back.
BayBrazil: Why is it so difficult to innovate in Brazil?
Fred: Within healthcare specifically, the reason why there is a limited amount of Brazilian innovation exported abroad, is because healthcare products are typically global products which means one needs to compete with innovators all over the world to develop a leading product. This creates a competitive disadvantage for Brazilian healthcare innovators who do have the same resources, support, mentoring, knowledge sharing, funding, etc that would be otherwise available for instance to a healthcare innovator in Silicon Valley. Having said that, Brazilian innovation does exit – there are a number of Brazilian healthcare products that are exported abroad and Adavium is making it one of its priorities to invest in Brazilian R&D. My take on Brazilian R&D, is that instead of trying to develop products that would compete with what most multinationals in the world are trying to develop but with significantly less resources, Brazilian innovators should focus on developing high quality products at a more affordable price that can meet the unmet needs of the “Long-tail” in Brazil as well as in other markets. This is an area where Brazilians do have a competitive advantage because few in Silicon Valley understand the needs of the “Long Tail” in Brazil and in other emerging countries, and there is a massive market for these products.
BayBrazil: How can BayBrazilians help Brazil innovate?
Fred: We, BayBrazilians, are very fortunate to be living in the most innovative and entrepreneurial region in the World. Many of us, who have been living here for many years, are now a part of the ecosystems and we sometimes forget how much experience and knowledge we have gathered over the years. Each of us has detailed knowledge of disparate parts of the ecosystem but without bringing this knowledge together, without being part of a Brazilian-centric community, and without forging strong ties to Brazil, this knowledge would not be shared as broadly and it should. This is the power and service of BayBrazil. By being an active member of our community, whether as a volunteer, a mentor, or a participant, we have an opportunity to influence thousands of Brazilian innovators who are working hard to strengthen the ecosystem in Brazil.